If you decide to trade as a partnership then unless you specifically agree otherwise in a partnership agreement your rights and obligations as a partner will be as set out in the Partnership Act 1890 (Partnership Act).

The Partnership Act is only suitable for particular partnerships and in many instances its provisions will not provide the partners with the rights that they wish to have nor the level of obligations that they wish their fellow partners to be subject to.

For example:

In the absence of a partnership agreement stating otherwise, the Partnership Act provides that all of the profits made by the partnership will be shared equally between the partners irrespective of the time capital contributions.

What happens if a partner dies?  

Pursuant to the Partnership Act the partnership will be dissolved.  Unless agreement can be reached between the surviving partners and the personal representatives of the deceased partner there is no right for the continuing partners to purchase the deceased partner's share of the partnership assets and the surviving partners are obliged to wind up the partnership.

These are just two examples of the problems that can arise as a result of failing to set out the partners' rights and obligations in a partnership agreement.

Don't leave it until it is too late

It is often the case that a partnership agreement is not considered until a problem arises. Unfortunately, it is usually too late then for the terms of a partnership agreement to be agreed by the partners.  

The best time to put a partnership agreement in place is at the time of setting up the partnership when relations between the partners are amicable.  Having done so, you should review the agreement from time to time as the partnership evolves to ensure it remains appropriate.

How we can help

Our corporate solicitors have vast knowledge in drafting new partnership agreements and advising on exisiting ones. They will ensure that your inetentions regarding your rights and obligations relating to the partnership are accurately implemented.

Contact us now

For further information or to arrange an appointment contact a member of the corporate team on 0115 9 100 200 or email corporate@actons.co.uk or fill in the contact form below.